A decision to invest by a company means that shareholders forgo the opportunity of consumption (a dividend now) now with the aim of increasing future consumption (an enlarged dividend later).
-investment decisions are about the delaying of current consumption in order to increase future consumption
-diminishing marginal utility: the time value of money is unlikely to remain a constant but will probably increase as more and more present consumption is sacrificed for investment so as to produce a greater amount of future consumption
-the time value of money can be expressed as a percentage: